Baron Small-Cap Growth Strategy
Objective & Strategy
The investment goal of Baron Small-Cap Growth Strategy is capital appreciation.
Baron Small-Cap Growth Strategy is diversified and invests for the long term mainly in small-sized U.S. growth companies under $3 billion market capitalization and with a minimum expected return of 100% within four or five years. The portfolio may retain investments that appreciate above $3 billion market capitalization.
Strategy Description
Baron Small-Cap Growth Strategy invests primarily in small growth companies.
Strategy Facts
| Inception Date | December 31, 1982 |
|---|---|
| Total Strategy Assets | $7.80 billion |
Risk/Reward Comparison
For strategy reporting purposes, the Firm is defined as all accounts managed by Baron Capital Management, Inc. ("BCM") and BAMCO, Inc. ("BAMCO"), registered investment advisers wholly owned by Baron Capital Group, Inc. As of 9/30/2011, total Firm assets under management were approximately $15.0 billion. The strategy is a time-weighted, total-return strategy of all small-cap accounts greater than $5 million as of calendar quarter-end managed using our standard investment process. Since 2010, accounts in the strategy are market-value weighted and are included on the first day of the month following one full month under management. Prior to 2010, accounts were included on the first day of the quarter after one full quarter. Gross performance figures do not reflect the deduction of investment advisory fees and any other expenses incurred in the management of the investment advisory account. A full description of investment advisory fees is supplied in our Form ADV Part II. Valuations and returns are computed and stated in U.S. dollars. Performance figures reflect the reinvestment of dividends and other earnings. The strategy is currently composed of separately managed accounts managed by BCM, one mutual fund (Baron Growth Fund) and three sub-advised funds (LVIP Baron Growth Opportunities Fund, Touchstone Fund and ING Baron Small Cap Growth Fund) managed by BAMCO. Baron Asset Fund was added to the strategy in 1987 and was removed in 1999. Baron Capital Asset Fund was added to the strategy in 1999 and became the sub-advised LVIP Baron Growth Opportunities Fund in 2007. Baron Growth Fund has been in the strategy since 1999.
BAMCO and BCM claim compliance with the Global Investment Performance Standards ("GIPS"). To receive a complete list and description of the Firm’s strategies or a GIPS-compliant presentation, please contact us at 1-800-99BARON.
Performance data quoted represents past performance. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future results.
The performance of accounts in the strategy may be materially different at any given time. Differences that may affect investment performance include cash flows, inception dates, and historical prices. Positions may not be the same or may be traded at different times. In addition, accounts in the strategy may be pursuing similar investment strategies, but may have different investment restrictions.
Specific risks associated with investing in smaller companies include that the securities may be thinly traded and more difficult to sell during market downturns.
The Risk/Return Comparison plots the since inception return of the Strategy against the Strategy's Standard Deviation for the same time period. Source: FactSet SPAR.
Sector and sub-industry weights, top ten holdings and portfolio characteristics are based on a representative account. Such data may vary for each client in the strategy due to asset size, market conditions, client guidelines and diversity of portfolio holdings. The representative account is the account in the strategy that we believe most closely reflects the current portfolio management style for this strategy. Representative account data is supplemental information.
Industry sector or sub-industry group levels are provided from the Global Industry Classification Standard (“GICS”), developed and exclusively owned by MSCI, Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”), unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided “as is” with no warranties.
Source: FactSet SPAR. From inception to 12/31/02, gross performance for the strategy was calculated on a quarterly basis. Therefore, statistics prior to 12/31/02 are calculated using gross quarterly returns.
Definitions: The indexes are unmanaged. The Russell 2000 Growth Index measures the performance of small-cap growth companies, and the S&P 500 Index of large companies. The Russell 2000 Growth Index, the S&P 500 Index and the strategy are with dividends, which positively impact the performance results. Standard Deviation: measures the degree to which the strategy’s performance has varied from its average performance over a particular time period. The greater the standard deviation, the greater the strategy’s volatility (risk). Sharpe Ratio: is a risk-adjusted performance statistic that measures reward per unit of risk. The higher the Sharpe ratio, the better the strategy’s risk adjusted performance. Alpha: measures the difference between the strategy’s actual returns and its expected performance, given its level of risk as measured by beta. Beta: measures the strategy’s sensitivity to market movements. The beta of the market (Russell 2000 Growth Index) is 1.00 by definition. R-Squared: measures how closely the strategy’s performance correlates to the performance of the benchmark index (Russell 2000 Growth Index), and thus is a measurement of what portion of its performance can be explained by the performance of the index. Values for R-Squared range from 0 to 100, where 0 indicates no correlation and 100 indicates perfect correlation. Tracking Error: measures how closely the strategy’s return follows the benchmark index returns (Russell 2000 Growth Index). It is calculated as the annualized standard deviation of the difference between the strategy and the index returns. Information Ratio: measures the excess return of the strategy divided by the amount of risk the strategy takes relative to the benchmark index (Russell 2000 Growth Index). The higher the information ratio, the higher the excess return expected of the strategy, given the amount of risk involved. Upside Capture %: explains how well the strategy performs in time periods where the benchmark’s returns (Russell 2000 Growth Index) are greater than zero. Downside Capture %: explains how well the strategy performs in time periods where the benchmark’s returns (Russell 2000 Growth Index) are less than zero.